Ireland's most bitter industrial dispute in more than a decade has spilled over into the nation's newspapers, setting journalists against management at the biggest-selling daily newspaper and prompting businessmen to question whether it is possible to get a fair hearing from union-dominated media.

At issue is the fate of 543 workers at Irish Ferries, which operates passenger and freight services between Ireland, the UK and France. The company, arguing that it will be out of business in less than two years unless it makes deep cuts in its labour costs, has decided to replace its entire crew with cheaper foreign workers.

After months of fruitless negotiations between the sides, Irish Ferries chose the nuclear option: a replacement crew, accompanied by security staff, was ushered on board one of its ships in port in Wales.

Members of Siptu, the union at the heart of the dispute, responded by barricading themselves into the control room and prevented the ship from sailing. The standoff escalated swiftly and by the weekend the company's four ships were all tied up in port, either in the hands of rebellious workers or unable to move because port workers would not handle them.

Politicians, media commentators and union spokesmen have competed in their condemnation of Irish Ferries' tactics, roundly decried as "thuggery, brutality and the law of the jungle", as Jack O'Connor, Siptu's general secretary, described it. Outrage reached its peak last Saturday when the Irish Independent, part of Tony O'Reilly's stable of newspapers, ran a front page story claiming that the company had considered using tear gas on its own employees.

Gerry Flynn, the paper's industrial correspondent, said tear gas was "one of a range of extreme measures" considered by management, but not ultimately sanctioned, and pinned his story on Alf McGrath, the head of personnel at Irish Ferries who has been the public face of the company throughout the dispute. McGrath was furious and went on radio that day to dismiss Flynn's story as a lie. Hearing the denunciation, Flynn raced to the radio studios where, breathless, he was ushered on air to defend his story.

Conspiracy theorists

Dramatic stuff, which Flynn recounted the next morning on the front page of O'Reilly's flagship title the Sunday Independent under the headline: "I stand by my Irish Ferries tear-gas story". Unfortunately for Flynn, Gerry O'Regan, his editor, appeared to disagree. Flynn has been taken off the story and is the subject of an internal investigation. A colleague's column critical of Irish Ferries was spiked on Monday; on Tuesday the paper's main comment page was devoted to an article by Eamonn Rothwell, the ferry company's chief executive, under the headline "Now here's the truth about the crisis".

The apparent about-turn in the newspaper's views on its own story has given conspiracy theorists a field day. McGrath is a former personnel director at the Independent; Peter Crowley, a brother of the Independent's chief executive Vincent Crowley, is a director of the company that owns Irish Ferries, as is Bernard Somers, an Independent director. Flynn's treatment has prompted the paper's NUJ chapel to express "grave concern". Management, they believe, has stampeded across their editorial independence.

But for many businessmen, the dispute has demonstrated how closely aligned the Irish media are with the trade union movement. The NUJ, though waning, remains a force in the industry: journalists at Irish-owned newspapers and in the broadcast media are required to be union members and the NUJ, which operates from Siptu's headquarters in Dublin's Liberty Hall, has a credibility long denied to it in the UK.

Bertie Ahern, the Irish prime minister, has insisted on the NUJ playing a key role in the negotiations that will lead to the creation of a statutory Press Council, and the unions' pronouncements are treated seriously by the media. The NUJ supported the Irish Council of Trade Union's decision to call a national day of protest about Irish Ferries this Friday, and its members will march in support of the workers who have refused to accept the company's redundancy terms.

Media coverage of the Ferries dispute has been almost universally hostile to the company. Broadcast news has focused on interviews with union representatives bemoaning the "race to the bottom" in Irish industry and referring to the company's "slave ships".

Irish Ferries has not helped its public relations cause by retreating into silence, but Rothwell believes that he does not stand a chance of being given a fair hearing. His assertions that the only alternative to redundancy and cheaper, foreign workers is closure and the loss of all jobs are dismissed.

Commentators, like Fintan O'Toole of the Irish Times, see it as a seismic battle for Ireland's soul. "If you care about Ireland's prospects of avoiding the creation of a ghettoised society, if you care about the future of the European Union, if you care about democracy, you have to care about Irish Ferries," he wrote last week.

As O'Toole suggested, the battleground is far broader than a fight about seamen's jobs. For the union movement, Irish Ferries represents a line in the sand: if they lose this fight, they claim, then employers across Ireland will follow suit and replace their expensive local workers with cheap foreign imports.

The media, however, are one of the last bastions of union power - Michael O'Leary, the chief executive of Ryanair, Ireland's most successful private company, refers to RTE, the state-owned broadcaster, as Radio Siptu and laughs at the suggestion that his company could ever get fair treatment from the station.

He has a point. The Irish media operate in a bubble that shields them from an evolving Irish society. Journalists are rarely sacked and can expect a job for life once they have union membership and a staff position. Culturally, they tend to come from an older Ireland: consensual, undynamic and left leaning. Just as significant, however, is the lack of diversity in Ireland's media, with none of the sharp ideological divides that characterise the British media. If there is a media bias against business, it is deep-set and cultural.

International competitors

Irish Ferries has been caught in the crossfire between a trade union movement desperate to protect its franchise in an economy that is attracting tens of thousands of willing, cheap workers from Eastern Europe, and the media are suffering collateral damage. Flynn's troubles at the Independent may yet become a cause celebre for the NUJ as it, too, fights a battle to retain its grip on a local media industry that is being slowly transformed by the emerging power of British newspaper groups. Just as the ferry company wants to bring its labour costs into line with its international competitors, so Irish newspapers have to respond to British predators taking their readers and their market.

Next up is the Daily Mail, whose Irish edition launches in the New Year and will be pitched aggressively at the Independent's market. It follows in the footsteps of News International's the Sunday Times, Sun and News of the World, which have all secured strong franchises in Ireland. The pressure on the local players is increasing relentlessly. O'Toole may be right: the Ferries dispute could prove seismic, both for the unions fighting it and the media covering it.